Equinix upside potential priced in, Truist sees downside risks

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The firm’s analysts stated in the investment bank’s memo to clients that the stock is fully valued with lofty expectations.

“We are downgrading EQIX to Hold from Buy as we think the stock is currently fully valued, accompanied by high expectations and potential deceleration in AFFO growth from tough comp, interest expenses, and CapEx,” they explained.

They added that while the company will benefit from digital transformation, they believe the uncertain timing of AI adoption raises questions about near-term incremental returns.

“EQIX trades at a 6x AFFO premium to peers (vs. historical spread of 1x), with a narrowing yield gap (+50bps over 10-yr UST),” continued the analysts. “The stock offers upside potential, but we believe much of it is already priced in, leaving room for potential downside risks.”